TVSMOTOR.NS WACC - Weighted Average Cost of Capital

The WACC of TVS Motor Company Ltd (TVSMOTOR.NS) is 13.7%.

The Cost of Equity of TVS Motor Company Ltd (TVSMOTOR.NS) is 15.70%.

The Cost of Debt of TVS Motor Company Ltd (TVSMOTOR.NS) is 5.75%.

	Range	Selected
Cost of equity	13.10% - 18.30%	15.70%
Tax rate	29.30% - 31.80%	30.55%
Cost of debt	4.00% - 7.50%	5.75%
WACC	11.4% - 16.0%	13.7%

WACC

TVSMOTOR.NS WACC calculation

Category	Low	High

Long-term bond rate	6.9%	7.4%
Equity market risk premium	8.3%	9.3%
Adjusted beta	0.75	1.12

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.10%	18.30%

Tax rate	29.30%	31.80%
Debt/Equity ratio	0.21	0.21
Cost of debt	4.00%	7.50%

After-tax WACC	11.4%	16.0%


Selected WACC	13.7%

TVSMOTOR.NS's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for TVSMOTOR.NS:

cost_of_equity (15.70%) = risk_free_rate (7.15%) + equity_risk_premium (8.80%) * adjusted_beta (0.75) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.